How to Write a Declaration of Guarantee in UAE: A Step-by-Step Guide

A declaration of guarantee is a legal document that states that a person or entity (the guarantor) agrees to be responsible for the debt or obligation of another person or entity (the principal debtor) in case of default or non-performance. It is a document that assures the creditor that the guarantor will fulfill their obligations or liabilities in case the other party fails to do so.

A declaration of guarantee can be used for various purposes, such as securing a loan, renting a property, buying goods or services, or entering into a contract. In the UAE, a declaration of guarantee must comply with the provisions of the Federal Law No. 5 of 1985 as amended (the Civil Code) and the relevant regulations of the competent authorities.

Parties to Declaration of Guarantee

The parties to a declaration of guarantee in the UAE are:

1. Guarantor: the person or entity who agrees to be responsible for the debt or obligation of another party in case of default or non-performance.
2. Creditor: the person or entity who is entitled to claim the debt or obligation from the principal debtor or the guarantor, depending on the situation and the terms of the guarantee agreement.
3. Principal debtor: the person or entity who owes the debt or obligation to the creditor and whose performance or non-performance triggers the guarantor’s liability.

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Why is the Declaration of Guarantee necessary?

• It provides a form of security and assurance to the creditor or the beneficiary that they will receive their due payment or performance even if the principal debtor or obligor fails to do so.
• It helps the principal debtor or obligor to obtain credit or financing from the creditor or the beneficiary by showing their credibility and trustworthiness.
• It protects the interests of both parties and reduces the risk of disputes or litigation in case of default or failure.
• It clarifies the rights and obligations of the guarantor, the principal debtor or obligor, and the creditor or the beneficiary, and sets the terms and conditions of the guarantee.

How to Write an Effective Declaration of Guarantee

A declaration of guarantee should be clear, concise, and legally binding. It should include the following information:

• The name and contact details of the guarantor and the creditor.
• The name and contact details of the party whose obligations or liabilities are guaranteed by the guarantor.
• The nature and scope of the guarantee, such as the amount, duration, conditions, and limitations.
• The date and place of the declaration of guarantee.
• The signature of the guarantor and the creditor, or their authorized representatives.

Steps to help you write a declaration of guarantee:

Step 1: Identify the parties and the transaction

The first step is to identify the parties involved in the transaction and the nature and scope of the transaction. You need to specify the names, addresses, and contact details of the principal debtor, the creditor, and the guarantor. You also need to describe the transaction that is being guaranteed, such as the amount and terms of the loan, the duration and purpose of the visa, the details and obligations of the contract, etc.

Step 2: State the guarantee amount and the conditions

The second step is to state the amount of the guarantee and the conditions under which the guarantor will be liable to pay or perform. The guarantee amount should be specified in a clear and certain manner. The conditions should also be clear and certain, and should indicate the events or circumstances that will trigger the guarantor’s liability, such as the default or non-performance of the principal debtor, the demand or notice of the creditor, the expiry or termination of the transaction, etc.

Step 3: Include the relevant clauses and provisions

The third step is to include the relevant clauses and provisions that will govern the relationship between the parties and the enforcement of the guarantee. Some of the common clauses and provisions are:

• Waiver of defenses: This clause states that the guarantor waives any defenses or objections that the principal debtor may have against the creditor, and agrees to pay or perform regardless of any dispute, counterclaim, set-off, or deduction that the principal debtor may raise.
• Joint and several liability: This clause states that the guarantor is jointly and severally liable with the principal debtor, meaning that the creditor can demand the full amount or performance from either the principal debtor or the guarantor, or both, without having to exhaust the remedies against the principal debtor first.
• Subrogation: This clause states that the guarantor has the right to recover from the principal debtor any amount or performance that the guarantor has paid or performed on behalf of the principal debtor, and to exercise any rights or remedies that the creditor has against the principal debtor.
• Indemnity: This clause states that the guarantor has the right to be indemnified by the principal debtor for any loss, damage, cost, or expense that the guarantor may incur or suffer as a result of the guarantee, including legal fees, interest, penalties, etc.
• Duration and termination: This clause states the duration and termination of the guarantee, such as whether it is for a fixed period or until the full satisfaction of the transaction, and whether it can be revoked or cancelled by the guarantor or the creditor, and under what conditions.
• Governing law and jurisdiction: This clause states the law that will govern the interpretation and enforcement of the guarantee, and the courts or tribunals that will have the authority to settle any disputes or claims arising from the guarantee.

Step 4: Sign and date the declaration of guarantee

The final step is to sign and date the declaration of guarantee by the guarantor and the creditor. The declaration of guarantee should also be stamped and notarized by a public notary, and registered with the relevant authorities, if required by law or by the transaction.

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Validity of Declaration of Guarantee in the UAE

A declaration of guarantee is valid in the UAE if it meets the requirements and conditions set by the UAE Civil Code and other relevant laws. Some of the main points to consider are:

1. A declaration of guarantee must be issued with respect to a specified debt or a thing certain in amount.
2. It must be in writing and signed by the guarantor. A verbal guarantee is not valid in the UAE.
3. A declaration of guarantee must be made with the consent of the principal debtor, unless the guarantor waives this right.
4. A declaration of guarantee must be made within the capacity and authority of the guarantor. If the guarantor is a natural person, he or she must have the legal capacity to enter into contracts and dispose of his or her property. If the guarantor is a legal person, such as a company, it must have the corporate power and authorization to issue guarantees and its representative must act within the scope of his or her delegated authority.
5. A declaration of guarantee must be made for a lawful purpose and in good faith. A guarantee that is issued for an illegal, immoral, or fraudulent purpose may be void or unenforceable in the UAE.

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Why Choose Notary Public Dubai?

Legal compliance is essential to ensure the validity and enforceability of any agreement or guarantee in the UAE. Therefore, seeking legal counsel specific to UAE laws is crucial to avoid any legal complications or challenges in the future. A drafting lawyer can help you with:

• Creating a clear, concise, and legally binding document that outlines the terms and conditions of your guarantee.
• Ensuring that your declaration of guarantee complies with the UAE Civil Code and other relevant laws and regulations.
• Assisting you in notarizing your declaration of guarantee, which is required for its validity and enforceability in the UAE.

You can contact Notary Public Dubai for more information on their legal drafting and notarization services.

Disclaimer

The information contained in this article is for general information purposes only. The article is not intended to provide legal advice or to substitute the advice of a qualified lawyer or a legal expert. If you need any assistance or guidance in writing a declaration of guarantee in the UAE, you should consult a qualified lawyer or a legal expert in the UAE.